Disability Income Insurance 101

What is disability income insurance?
Disability income (DI) insurance provides you with replacement income if you are unable to work due to an illness or injury that is covered by the policy. DI insurance can help cover your medical bills, your house payment and other common monthly expenses.

What is the benefit of having disability income insurance?
One of your most valuable assets is your ability to earn a living. Take away your income, and it is amazing how quickly you can deplete savings and even incur large debt just trying to cover your regular monthly expenses. 

Another advantage is that unlike an employer-paid group long-term disability (LTD) plan, an individual DI insurance product is "portable." That means you own the policy, and it stays with you even if you change jobs.

What are the different types of disability income insurance?
DI insurance policies for individuals typically come in one of two forms:

  • Non-Cancellable: Guarantees that as long as you pay the premiums, your DI policy cannot be cancelled, and your premium rate will be locked in for a set number of years. This policy is available for people working in professional, executive, white-collar and gray-collar technical occupations.
  • Guaranteed Renewable: Guarantees that you can renew the policy with the same benefits as long as you continue to pay the premiums. There is the possibility your premium will increase. This policy is available for skilled technicians, on-site supervisors, manual laborers and people working in certain trades. 

Owners of small businesses, including medical and legal practices, also need DI insurance to protect the owners' interests. Coverage options are:

  • Business Overhead Expense (BOE): Reimburses small-business owners for the expenses required to maintain the business as a going concern if an owner is disabled.
  • Buy-Sell: Provides the funds to assist in the purchase of a disabled person's ownership interest in a partnership or other small business. 

Who needs it?
Just about everyone. Whether you are single, married, have children, or own a business, a disability that keeps you out of work can be costly. To maintain your standard of living in the event of disability, it is important to have this coverage.

You might like to know...
Insuring against disability has not been a high priority for most workers, because many assume they are already covered through Social Security, workers' compensation or employer plans. It is important to note, however, that each of these plans has limitations and should not be solely relied upon for income replacement during disability. An individual DI policy can help supplement these plans and provide additional peace of mind.

It can happen to you.
Nearly one in four men can expect to suffer a disability that keeps them out of work for 90 days or longer at some point during their working years. For women, the odds are about one in three. Moreover, one in seven workers can expect to be disabled for five or more years before retirement.*

*Source: www.lifehappens.org

Your questions answered ...
Q: I have disability coverage through my employer. Is that enough?
 If your employer offers a group LTD plan or other coverage, then take the time to find out if that would be sufficient in meeting your income-replacement needs in the event of a disability. If it is not, then you can seek to purchase coverage on your own. One of the benefits of individual coverage is that it stays with you even if you change jobs.

Q: How much disability income insurance do I need?
 Find out by using this simple calculator from the nonprofit Life and Health Insurance Foundation for Education, or by discussing your situation with an Ohio National financial representative.

Talk to us to determine if one of our DI insurance products may be right for you.